By: Real Estate Mates
I was given this book as a gift. I usually spend quite a bit of time researching a book before I purchase it, so that I know I want to read it. I had never heard of this one.
It was fantastic. It was a great overview of several different niches in real estate investing with practical advice. If you are new to real estate or if you are established and curious about other niches, you need to read this one.
Chapter 1: Wake Up, Mate: You Aren’t Living The Real American Dream
Financial Freedom Exercise
- Write down your end goal.
- Figure out what your monthly living expenses should be.
- Figure out how much cash flow you will need to produce each month to cover these living costs and multiply that by 12 to get your annual cash flow number.
Chapter 2: How To Recruit Your A-Team, By: John Carney
“Surround yourself with professionals who have the skills you don’t possess.”
“Relationships, not seminars or gurus, will position you to become a profitable real estate investor.”
Needed Relationships to pursue and constantly nurture:
- Certified Professional Accountant (CPA)
- Real Estate Attorney
- Finance Professional (AKA a lender or loan provider)
- Title Agent
When the time comes to transfer the title of the property , your title agent prepares all of the documents for closing or recording the deed. A skilled title agent is the key player on your team who will do a deep dive into details of the title history or chain of title when you are conducting due diligence on a property to purchase.
- Insurance Agent
- Licensed Property Manager
- Real Estate Agent or Broker
A mentor’s role is not that of a lecturer. A mentor is someone to collaborate and talk through ideas with, to help you brainstorm solutions to problems you face, and to help you find solutions when you think you’re at a dead end.
Two characteristics that a potential real estate investment partner must possess are: shared values and a skill set that is beneficial to the partnership that you do not possess.
Chapter 3: Mastering Multifamily Investing, By: Kevin Dhillon
Meh. A basic overview chapter.
Chapter 4: Why Turnkey Real Estate Investing?, By: Geremy Heath
Five reasons to invest in American Turnkey Real Estate
- Strong Market Appreciation
San Antonio is one of the best cities in the US for future market appreciation for 3 reasons: low cost of living, low unemployment, and high population growth.
- High Cash Flow Markets
- Low-Interest Financing
- Ability To Leverage Your Investment Capital
- Real Estate Tax Benefits
The US government wants investors to provide housing to the millions of Americans living throughout the country. As a result, the US tax code is written in a way to offer some great benefits to investors who own real estate, such as:
- Compound market appreciation in a tax-deferred environment
- Defer capital gains through a 1031 exchange
- Tax-Free Cash-out Refinance
- Depreciation Expenses
- Invest using Self-Directed IRAs or Superannuation Funds
Chapter 5: Yes, Mobile Home Park Investing Can Be Sexy, By: Bryce Robertson
Home study course: A to Z of MHPs: Everything You Need to Know About Mobile Home Park Investing
Eliminating Mobile Home Park Myths
Myth 1 – Trailer Parks & Trailer Trash
Most parks have working-class families who own their own home, have their own yard, get along with their neighbors, and take pride of ownership in their home, yard, and community.
Myth 2 – Mobile Home Park Investing Is Not Sexy
The financial benefits of a well run park are very sexy.
Top 5 Reasons to Invest in Mobile Home Parks
- Supply and Demand for Affordable Housing
There are more people who need to live in affordable housing than there are affordable houses. This means if you buy a mobile home park in an affordable housing market, your phone should ring off the hook with an abundant selection of applicants to choose from.
With an annual 1% decline in available mobile home parks (due to more parks being closed down than being built) and with an increase in low-income Americans and an influx of baby boomers, there is undoubtedly a need for mobile home parks in America.
- Institutional Programs and Warren Buffett
In 2003, Warren Buffett bought Clayton, the largest mobile home manufacturing company in America, for $1.7 billion.
There were some unfavorable changes for park owners in mobile home financing laws after the 2007 financial meltdown.
Clayton Homes later partnered with 21st Mortgage to change the industry with a new program for mobile home park owners.
Fannie and Freddie – both publicly owned, government-sponsored enterprises that purchase mortgages – have programs for mobile home park financing.
Section 8 vouchers can be used toward mobile home rents, but now Section 8 also can be used toward mobile home purchases.
Due to the $5,000 – $10,000 cost of moving and setting up a mobile home from one community to another, it’s extremely rare for residents to move their home once it is set, creating a stable and loyal foundation of long-term residents.
- Financial Advantages
Tax benefits from accelerated depreciation. Commercial property improvements are typically depreciated over 39 years; however, the improvements in mobile home parks (roads, gutters, utility lines, utility meters, mailboxes, even mobile homes, and so on) have a combined accelerated depreciation of fifteen years plus.
- Mobile Home Park Profits
They can be massive passive cash flow machines.
Attractive Cap Rates.
Acquiring double digit cap rates is not uncommon in the mobile home park space.
We can do this by buying at the right price, raising rents, improving collections, removing non paying tenants, billing back utilities to tenants, and eliminating unnecessary expenses.
Increasing occupancy by adding more homes to the community and filling them with paying tenants.
Chapter 6: Get Syndication Savvy, By: Reed Goossens
The pitch deck consists of the following specific items:
- Title Page
- Executive Summary
- Deal Description
- Market Overview
- Investor Returns
- Pictures and maps showing the deal and area
- A clear investment strategy of how you intend to improve cash flow and force appreciation
- A small Sensitivity Analysis
Chapter 7: How To Assess Hotel Investments, By: Mark Huang
Hotel Speak – KPIs and Jargon
Occupancy: Calculated by dividing the number of hotel rooms that are occupied (sold) byt the number of hotel rooms available (both occupied and empty) over a given period. Occupancy can be calculated on a daily, monthly, quarterly, or yearly basis.
Average Daily Rate (commonly known as ADR): Calculated by dividing the hotel’s total rooms revenue by the total number of room nights sold over a given period.
Revenue Per Available Room (commonly known as RevPAR): Calculated by multiplying occupancy by ADR or dividing total rooms revenue by the number of rooms available.
Limited Service: these hotels typically do not have food and beverage outlets such as restaurants, meeting space, or banquet facilities. If they do have food and beverage (F&B), it is usually in the form of complimentary continental breakfast.
Full Service: the hotels have multiple F&B outlets, including restaurants, lounges, and bars. Examples: Marriott, Hilton, Hyatt, and Intercontinental.
Select Service: these hotels may have a restaurant, but it has a limited menu (such as a few sandwiches, soups, and one or two pasta dishes). Examples: Courtyard by Marriott, Hilton Garden Inn, Hyatt Place, and Aloft.
Extended Stay: these hotels are characterized by larger guest rooms, and each room typically comes with a full kitchen. Examples: Residence Inn by Marriott, Hyatt House, and Home2 Suites by Hilton.
Boutique: smaller hotels (around 100 rooms or less) and are characterized by high-quality design and style. Example: Hotel Indigo brand.
Capex, Renovations, and Improvements
Typically, hotels undergo a renovation every seven to ten years. This may be more frequent than other real estate property types but makes sense given guests check in day in and day out.
Guest expectations change and hotels have to constantly upgrade and refresh themselves to stay competitive.
Uniform Systems for Accounting in the Lodging Industry
The Uniform System of Accounts for the Lodging Industry (USALI is the industry standard that hotels use for their profit and loss (P&L) statements.
- Rooms Revenue
- Food and Beverage Revenue
- Other Operated Departments Revenue
- Miscellaneous Income
- Food and Beverage Expense
- Other Operated Department Expenses
- Administrative and General Expenses
- Information and Telecommunication Systems Expenses
- Sales and Marketing Expenses
- Property Operations and Maintenance Expenses
- Management Fee
- Property Taxes
- Rent (if the hotel is on a ground lease)
Chapter 8: Ride The Technology Trends, By: Tim Manson
“I was excited about new developments in real estate technology, and I decided it was time to launch my technology business in Sydney. Soon I found that the barriers Australia put on new businesses made it far less likely to succeed.”
Four Accelerating Trends in Real Estate Technology
- Replacing Brokers
We may never see the complete eradication of the broker, but as each year goes by, more and more of their professional activities will be assumed by various technologies.
- Peer-To-Peer Transactions
The rise of Airbnb has revolutionized real estate.
- New Sources of Funding for Real Estate Ventures
Non-bank financial institutions like mortgage REITs, foreign capital, and private equity funds are stepping in to provide construction loans, especially for higher-leverage deals.
Recently, real estate companies and family offices have backed venture funds like Fifth Wall, MetaProp, PiLabs, and Urban Us. Huge developers like Hines, Lennar, Macerich, and EQ Office are pouring in capital.
Crowdfunding is also a new source of capital for real estate ventures. Websites like Cadre, Fundrise, and RealtyShares connect developers to large numbers of small funders, who generally write checks for $1,000-$10,000 and see returns of up to 20 percent.
- Blockchain and Cryptocurrency Investing
The development of smart contracts on blockchain platforms such as Ethereum allows real estate assets to be tokenized and traded like traditional equities and like cryptocurrencies. Smart contracts can replace the endless paper pushing with digital escrow and clearing agents. Real estate Initial Coin Offerings (RE ICOs) permit people to invest in proptech or fintech companies, or in real estate directly.
People also are starting to purchase real estate with cryptocurrencies. Why would someone want to use crypto to pay for property? The sale has no middleman, for one. It’s also easy and inexpensive to send large sums of money with it.
Chapter 9: Getting Set Up To Invest In The United States, By: Ben Gray
“You are crazy to consider doing taxes yourself.”
Banking: the best solution we’ve been able to find is partnering with a large international payments company.
International Wire Transfers: Use AFEX, OZForex, TransferWise, or another company that specializes in international wire transfers.
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